What Is Dwelling Coverage & How Does It Work?

Property owners need to ensure they have comprehensive homeowners insurance. Dwelling coverage is a type of homeowners insurance that protects the structure of the home in the event of a covered disaster. Homeowners should understand what dwelling coverage is so they can choose the best home insurance policy for their situation.

What is a dwelling?

A dwelling is an insured structure that is covered by dwelling insurance. For example, dwelling home insurance would cover the home itself plus any structures physically attached to it, but not other structures on the property such as a shed or a fence.

What is dwelling coverage?

Dwelling coverage is the type of homeowners insurance that provides protection for the home and items attached to it. For example, a dwelling coverage policy would pay to rebuild or repair a home after it was damaged by fire, wind, or other covered hazards.

Types of dwelling insurance coverage

To understand dwelling coverage, it's helpful to know what types of dwelling insurance exist. Dwelling insurance options include:

• Homeowners dwelling insurance: This covers a home and attached items such as countertops.
• Rental dwelling insurance: This covers the structure of a rental home, as well as attached items.
• Condo dwelling insurance: This covers the interior part of the condo owned by the policyholder, such as flooring, countertops, and appliances.

What is covered under dwelling insurance?

Dwelling insurance covers any repairs that are necessary to the insured home or condo. It can also pay to rebuild a home if it is damaged by a covered loss. Dwelling insurance will pay for repair or replacement after the home or condo is damaged by:

• Fire
• Smoke
• Water damage (but not from floods)
• Lightning
• Wind
• Hail
• Riots or civil unrest
• Vandalism
• Theft
• Falling objects

Some dwelling policies are open peril. These cover all causes of damage unless specifically excluded. Others are named peril and cover losses only from specific named hazards.

What is not included in dwelling coverage?

Dwelling coverage only protects the property itself, as well as attached items. Dwelling insurance does not include:

• Personal property coverage: This includes repair or replacement of an individual's personal possessions. Personal possessions are defined as things a property owner would move with them if they relocated. This includes things such as clothing and televisions.
• Loss of use: These are additional costs a person incurs if they cannot live on their property due to damage by a covered loss.
• Damage to other structures: This includes pools, sheds, barns and other structures on a property.
• Liability: This includes costs a property owner would be expected to pay if someone was injured on their property.

Other structures homeowners insurance coverage

Dwelling coverage is often not sufficient to fully protect a homeowner. That's because many property owners have additional structures on their property. This can include sheds, swimming pools, and barns.

Homeowners can buy other structures coverage as part of their home insurance. This is an additional component of a homeowner's policy that supplements dwelling coverage. It would pay for losses to these detached structures on the property.

How much does dwelling coverage cost?

The cost of dwelling coverage varies based on many factors. The risk of loss plays a huge role in determining the price of dwelling insurance. Homeowners who live in high-risk areas will pay more. Homeowners with more expensive properties also pay higher costs for dwelling insurance. That's because the dwelling would cost more to rebuild or repair.

The best home insurance companies aren't always the least expensive, so be sure to get an apples-to-apples comparison so you really know what you’re getting for your money.

How much dwelling coverage do I need?

Every homeowner should make sure to have enough dwelling insurance to fully rebuild a property in the event it is totally destroyed.

Homeowners should have replacement cost home insurance for their dwelling. This is an alternative to market value coverage. Market value coverage would only pay what the home is worth, which may be less than the cost to rebuild. Replacement cost insurance pays what it costs to rebuild.

Homeowners may also wish to consider buying extended dwelling coverage. This is dwelling insurance that goes above the standard amount of insurance. For example, say an insurance policy limit is $500,000 for a home. Extended dwelling coverage could increase this amount by 25%. In that case, the homeowner would receive up to $625,000.

Extended dwelling coverage is important in cases where rebuilding a home costs more than expected. This could become necessary if, for example, a home was destroyed along with many others in the area. The high demand for rebuilding could push prices up. Extended dwelling coverage would ensure that there was money to pay the added fees to rebuild.

How to buy dwelling home insurance

Homeowners should carefully consider how much dwelling insurance they need. Once they have determined the amount of coverage, it's time to shop around for insurance quotes.

Many homeowners insurance companies offer dwelling insurance. Property owners should get quotes from multiple insurance providers. By getting quotes from at least three insurers, property owners can make sure they are paying the most affordable rate to protect their home.

After shopping around, homeowners can go through the process of purchasing homeowners insurance by completing an application with their chosen insurer.